Local veggies, national scale

NATHANIEL RU: August 1st, 2007. Anything that could have gone wrong went wrong that day. 

JEFF BERMAN: Oh no!

RU: I think it was a few days before we were opening. We had the laptop with all of the recipes that we had stored on it, sitting in our apartment, and it got stolen.

And this is before the Cloud, and so we had to spend the last 24 hours before we opened, trying to re-memorize all of the recipes.

And sit in this kitchen all day to kind of reformulate them, whether it’s the dressings, how we put things together.

JONATHAN NEMAN: We had this thing called Sweet Flow, which was our organic frozen yogurt. And it had a very specific recipe in the ratios, and I just remember we’d figured out everything else, but that was the last thing.

I just still have this burning image of my mind. Nate, standing over the machine. All night, he’s putting together different recipes. His hands are deep in the machine. We have to clean it and keep doing it. And I remember right before opening, he pulls it out.

He’s like, “I think this is it,” I’m like, “I’ll taste, okay, that’s it.” And, and that was, that was the recipe.

RU: We just had to push through.

And it was kind of that gauntlet moment for us to kind of say, “Hey, we’re going to do this.” And even if it’s not a hundred percent perfect, showing up and just opening our doors day one was a really big milestone for us.

BERMAN: That’s Jonathan Neman and Nathaniel Ru. Along with Nicolas Jammet, the three are the co-founders of Sweetgreen. For the few of you who don’t yet know it, Sweetgreen is a fast, casual food chain focused on fresh salads, grain bowls, and other healthy food. This near-disaster story of day 1, location 1, stands out.

Because from the outside, theirs is a straight, up-and-to-the-right unicorn journey. Nick, Nate, and Jonathan founded Sweetgreen in 2007 as seniors at Georgetown University in Washington, D.C. That first restaurant was tiny, just 500 square feet. Since then, Sweetgreen has grown into a public company.

And has a market capitalization over 2.5 billion dollars.

It’s a scale story full of setbacks, including that harrowing laptop burglary that led to invaluable lessons.

The three co-founders have grown as leaders, bringing Sweetgreen from a dorm-room idea to an American success story. That’s why we’ve invited them to share their journey on Masters of Scale.

BERMAN: I’m your host, Jeff Berman.

Copy LinkA trip to Sweetgreen in LA

Before I sat down for a conversation with Sweetgreen co-founders — Nicolas Jammet, Jonathan Neman, and Nathaniel Ru — our producers and I went to one of their LA locations for lunch.

Can I get a miso-glazed salmon bowl? 

SWEETGREEN STAFF: Beautiful choice.

BERMAN: Great.

SWEETGREEN STAFF: Anything on there is okay?

BERMAN: I want it the way God intended it. 

SWEETGREEN STAFF: Yeah, would you like it for here or to go?

BERMAN: To go, please. 

SWEETGREEN STAFF: To go. You got it. Alright.

BERMAN: Thank you. 

SWEETGREEN STAFF:  And it does come with two scoops of… Is that okay? 

BERMAN: That’s great. 

SWEETGREEN STAFF: It does come with a crispy onion inside or the avocado, and then it also comes with the spicy cashew dressing on the side, if you wanna do just one of them.

BERMAN: Just one’s fine. Yeah. Thank you. 

SWEETGREEN STAFF: Great. 

BERMAN:  We’re at Sweetgreen in mid-city Los Angeles on La Brea, I’ve been going to Sweetgreen for Probably close to 10 years now, essentially since they opened back in Washington, D.C., and it’s kind of mind-boggling to think that they now have more than 200 locations nationwide, more than 6,000 employees — I think the first salad unicorn the world has ever seen.

You’re so kind. Thank you. 

SWEETGREEN STAFF: I really hope you enjoy. 

BERMAN: Thanks, Karen. Appreciate you. 

SWEETGREEN STAFF: Have a great day. 

Lunch devoured, I went to sit down with the company’s three founders, Jonathan, who’s now CEO, Nate, head of marketing, and Nick, chief concept officer. I told them their work is literally in my DNA at this point, given how much Sweetgreen I’ve eaten since I first started going to their original store in D.C. The three guys know each other and work together so seemingly well that they rarely talk over each other. But they do pick up each other’s sentences.

So I’d love to hear the story of how you guys came together as we, as we start the conversation.

Copy LinkSweetgreen: The origin story

NICOLAS JAMMET: This is Nicolas.

So our story starts 20 years ago. We met as freshmen at Georgetown. We were next-door neighbors in our freshman dorm room, and over the years really bonded around some of the similarities we had in our lives. We were all kids of immigrants, parents that had come to this country and built businesses.

And so we had all grown up in this context of our parents building businesses, running it, pouring their blood, sweat, and tears into something. 

We also had this other conversation happening in our life of not feeling good about the options that we had around us to eat.

And so there was this daily problem. And so we said, let’s solve it. 

Let’s write a business plan. And at the time, Georgetown was not the most, I would say, you know, encouraging of entrepreneurship. Everyone really wanted to, you were geared towards becoming a banker, consultant, more institutional career paths, and—

BERMAN: And DC is not exactly the most entrepreneurial town in America.

JAMMET: Foreign service. All of that stuff. That was more of the culture of Georgetown. But the three of us love the idea of starting something and solving a problem. 

And there was this one lone elective class with an adjunct professor, entrepreneurship. So we all took the class in separate semesters. And it really taught you how to build a business plan, how to think about creating something, reaching out for advice, creating a network of other entrepreneurs.

And so we started writing the business plan.

BERMAN: And so each of you took the class, but at different times.

RU: Correct.

BERMAN: Had you communicated with each other about the class? Had one of you taken it first and been like, “you guys have to do this?” Or was this total happenstance that you’d each taken the class?

RU: This is Nate.

I think we all took the class, but the thing that actually bonded us even more was that actually all of our parents were entrepreneurs.

They almost gave us the permission to say yes in a way where, where we were getting a lot of no’s in other places.

And just knowing that we could jump off the cliff and do it as three young 21-year-olds and having the support of our parents because we watched them was really helpful too.

BERMAN: And so I can see why you’d come together given the shared family history and the foundation of this class.

But it’s not obvious that you would launch a salad franchise. So how, how did that become the idea that that got you guys going in this direction?

NEMAN: We had all studied abroad somewhere our junior year. I studied in Australia. And I had just gotten back senior year from that experience. And one of the things that really stuck with me was the culture there of food and the lifestyle around being healthy.

Like the cool kids surfed and skated and were healthy and went to these healthy cafes. And that was the cool thing to do. And it was such a contrast to how healthy food was viewed here in the U.S., especially at the time. Healthy food was not cool. It was this idea of, like, let’s create a tiny little restaurant for ourselves, our friends. We just counted how many I remember we went. We were like, “how many people do we have to serve in a day to break even?” And we went and stood outside the other restaurants in the area.

We went to the subway, we went to the Chipotle, we went to the Booeymonger, all these places with a clicker. And we literally counted like, “okay, like they got 300 people in a day. How many people do we need to break even?” And it really just started very, very small, and I think.

If we want to be honest, we thought it was going to be easy. We thought it was like, how hard can this be? 

We found a location. It was right across the street from our dorm. It was 500 square feet. Tiny. I mean, this thing is a tiny little thing. And I remember we looked at ourselves. We’re like, okay, we’ll have this open by April 1st. It was October. We’re like, we’ll raise the money. We’ll write the business plan.

We’ll go buy the food. We’ll go buy the kitchen equipment. You’re going to put it in. We’re going to prep the food and we’ll hire some people and call it a day.

RU: And it was the middle of the recession.

JAMMET: Yeah.

NEMAN: In the middle of a recession, like, oh, we’ll design a cool logo and like a brand, and we’ll be off to the races.

JAMMET: To actually remember the landlord of our first location wouldn’t even return our calls. John called her 30 days in a row every single day. So she finally took a meeting just to stop the calls. And she ended up giving us a chance. She let us sign a lease, and in hindsight we’re like, “Wow, crazy for her to sign a lease to three students with no background, and you know, not much cash in the bank.”

NEMAN: I’ve heard a lot of other entrepreneurs talk about this, that if they knew what they were actually getting into, they would have never done it.

I remember even when we opened the first one at one point, we’re like, we’ll get to three, and then it’ll be self-sustaining. It’ll just grow on its own. And I think you underestimate how many micro-challenges you have to solve. It’s really so many different businesses within one business in order to be great. You have to master the supply chain, you have to master real estate, construction, design, customer experience, technology, you know, today, automation, you have to be great at leadership and people — there’s so many things that you have to do.

And I think for us, we’ve fallen in love with the difficulty because how hard it is, is what makes the mode and what makes it so valuable and powerful over time.

BERMAN: Adopting a mindset that your business will be successful is important. But what matters more is what you do when the naivete and rush of newness wear off and the challenges set in.

It takes an infinite learner’s mindset at that point because the challenges can seem insurmountable. In October, 2006, the founders were all still finishing school. When they started to take the plan off the paper and into the real world, the feedback got more blunt.

Copy LinkHow Sweetgreen raised their first round of funding

NEMAN: I remember the specific point, where we thought originally that we could do it for 100 grand. 

And so, we wrote the business plan. It was a Christmas break, and we all started to go to friends and family and all our old bosses to raise money.

The average investment for us in that first round was about 5,000. We hired an architect. We hired a general contractor. They sent us the budget, and the first budget was like, I don’t know, three or four hundred thousand dollars or something. And we just looked at each other. We’re like, “Oh God, this is not going to work, this doesn’t make sense.” We thought it was going to be a hundred thousand dollars and open April 1st. And all of a sudden it was going to open sometime that summer and cost many times more than that. And I think that was really the moment where it was, okay, this is for real. 

RU: I called my dad, and I pitched him this idea that I had with these two guys. And, there’s a long pause, and he goes, “Nathan, that salad dressing better be damn good.” And then hangs up the phone. And that was my first piece of advice I got on the business.

BERMAN: It’s one thing to raise a hundred thousand from friends and family. It’s a lot, and not everyone’s in a position to do that, you guys were amazing, but now you need closer to a half million. So what, how’d you get there?

NEMAN: Talking to a lot of people, hundreds and hundreds of people. It’s a painful process raising money, especially when you’re unsuccessful in it, especially when you have to do it with a lot of people, but the value in it was sharpening your vision. We ended up getting about 50 investors in that first round to raise $300,000.

That means we have to talk to 250 people. So when you have to have 250 conversations selling this vision, answering all these questions, it really, again, forces you to sharpen your plan. That was really, really valuable; we had to think about so many aspects of the business because people were giving us money, and we had to be able to answer those things.

BERMAN: They had hundreds of conversations to raise the capital they needed. When you’re pitching your business, especially early in a round, it’s essential to urge prospective investors, including friends and family, to ask tough questions. This includes getting feedback from investors who say no.

Not only did this experience help the trio hone their pitch, it forced them to take a deep dive into their business plan, helping them uncover problems before they reached more critical stages. 

Copy LinkBuilding a community around Sweetgreen

Their persistence and incorporating feedback paid off. Sweetgreen opened at the end of the summer the year they graduated. Yes, after the recipe laptop was stolen. They launched the restaurant August 1st, 2007. It did well enough for them to expand. Two years later, they opened their second Sweetgreen, in D.C.’s busy DuPont Circle.

RU: It was going to be our flagship location, three times the size, three times the cost.

And we opened our doors in April of 2009, and we have no customers, nobody came. And that was another moment when we looked at each other, and we said, “Shit, this isn’t going to work.”

BERMAN: What went wrong?

RU: We were on the wrong side of the block. Across the street was one of the number one Starbucks in the city, and we just had to figure out a way to get people from that side of the street to our side of the street.

BERMAN: That’s when Nate had an idea.

RU: The only things that we knew how to do were to serve healthy food and DJ. And so we went to Guitar Center, bought a $400 speaker. We put it outside, we faced it towards DuPont circle in the park, and the three of us sat out there. We played music, we passed out menus, we passed out samples every Saturday and Sunday. And it just created this kind of community vibe and energy outside that got people to come to our side of the street.

And so the next year, we did a block party in the parking lot that we shared with the farmer’s market, which was really great, a free block party with local musicians. And then we really wanted to throw a mini festival where you could serve healthy food and hear great music. And we got linked up to the guys that produce 930 Club, and they have a bunch of venues in D.C., and they sent us a few ideas, and I remember getting an email from them saying that, “Okay, the Strokes are interested in playing your salad festival.”

And we had this decision to make at the time where we had to push our chips in and say, we’re going to do this big 15,000-person festival, but in order for us to do this, we have to sell it out.

Otherwise, we’re going to lose a lot of money.

BERMAN: You’re now in two of the hardest businesses in the world, by the way.

RU: Now we’re in big music production and healthy, healthy food and, and we looked at each other. I remember that moment, and we said, “It’s almost like a no-brainer decision because this is something that no other restaurant company would do.”

And we think about it as, at the time, a content platform for us, and a community-building platform for us. And so we did it, and we booked the Strokes in 2011, sold the whole thing out. And that’s what became, the Sweet Life Festival, which we ran for six or seven years in D.C.

JAMMET: I mean, I’ll never forget the cover of the Washington City paper the next day . The headline was something like, “What the hell are three salad kids doing hiring The Strokes?”

And it was a full-page article. And we’re like, “Yeah, that’s exactly why.”

It started with 20 people, 30 people, 40 people. Ended with 25,000 people in a field at Merriweather Post Pavilion. But it was really the beginning of Sweetgreen starting to build this sense of community and that we’re building something different that wasn’t just another fast food brand.

BERMAN: Sweet Life Festival ran for six years, helping build a large following in the D.C. area and beyond. The founders knew that simply offering a healthier alternative to the fast food around them was not enough.

Sweetgreen would only reach the heights they aspired to if it was more than a restaurant. The founders wanted to build something that their customers felt emotionally connected to, an identity brand.

The festival was a big gamble as a way to do that, but they were willing to take that risk because of how it could burnish and seal Sweetgreen’s reputation and gain an even more loyal following. 

Copy LinkScaling Sweetgreen in the DMV

By 2013, fewer than six years after opening that first restaurant in Georgetown, Sweetgreen had expanded to nearly 20 locations.

Perhaps counterintuitively, when it comes to blitzscaling, Sweetgreen did not want to franchise. They preferred a central ownership model, but that meant they needed to build their own foundation for scale.

NEMAN: Very early on, we said, we don’t want to be a franchise restaurant because if we do, we may lose control of the quality of what we do. We’d rather go a little bit slower and own the end-to-end experience to ensure that quality, and stand the test of time versus opening the floodgates and selling franchises. 

But at one point, we got an offer from a very legitimate, large company.

That wanted to license the brand and put it in over a hundred places. It was a very lucrative deal. It was so attractive. And you know, at some point when you’re in that business, you think that everything is a race.

You’re like, you’re still looking at your competition, and you’re like, “Oh my God, they’re going, they’re franchising. So they’re going faster than us. They’re going to beat us. It’s first to market.”

But we thought long and hard. And we wanted a business that wasn’t just going to have this short-term pop and not be around for a long time. But something that could stand the test of time.

BERMAN: Here’s Nick.

JAMMET: I think the foundation of the values is really helpful because it allowed us to make the proper decisions. Then as we started to build out our team, make sure that we were hiring people that also lived by those values and made decisions in that lens.

So much of how we operated those first three restaurants was very mom and pop, it was like a farmer coming in the back door. And so we said,”How do we put the right systems in place around the things that really make us special?”

So we had the values, and we were trying to prioritize this food ethos we were creating around serving a different type of product. So we really started to build, I guess, V1 of a scalable supply chain, according to the ethos that we wanted to serve.

And at that point we decided, let’s go deeper in this D.C., Virginia, Maryland region. Let’s really own, build a brand, master this model a bit more before we start spreading ourselves to all these different cities. And in hindsight, probably one of the best decisions we ever made.

BERMAN: And in part, I assume, because you could work with the same suppliers, right?

So you had some quality.

JAMMET: Same suppliers, understand what it looks like from going from one to three to ten in a region and understand what that system is. And also, you know, you can wrap your arms around one region. You can get to every restaurant. You can be really thoughtful. Having restaurants around the country really early is just a whole different set of challenges.

BERMAN: This level of attention to sourcing the highest-quality local ingredients is an example of the values driving the company’s scale strategy. Founding trio of Nate, Nick, and Jonathan prioritized environmental sustainability and more healthy eating at scale.

But how do you scale a national business model that relies on locally sourced produce?

After the break, we hear how Sweetgreen’s early pattern of steady growth gave way to a new strategy and big changes. 

[AD BREAK]

Copy LinkHow the co-founders approached new markets

BERMAN: We’re back with Jonathan Neman, Nathaniel Ru, and Nicolas Jammet, the co-founders of Sweetgreen. To watch the extended conversation, head over to our YouTube channel, where you can find this and more.

Before the break, the three co-founders had decided that rather than go national right away, they would grow in the D.C., Maryland, and Virginia area, known to locals as the DMV. When they did enter new markets outside the region, it was with careful planning. Here’s Nick.

JAMMET: We wanted to build enough confidence in the model and the brand before we went to some of these larger cities. And, building the brand over the first couple of years and just, you know, we got to around 20 restaurants in D.C., Virginia, Maryland. We’d gone to Philly, so a little further, really understanding what, you know, a second city feels like, And we made a bunch of mistakes on how you hire, how you operate remotely, how you build a second supply chain. How do you build a brand from scratch in a new city? All these micro-learnings that really allowed us to, once we were ready to go to New York, Boston, California, go with some set of a playbook, some sort of belief of how we introduce sweet green the right way in a new city.

RU: New York is just a whole different type of operation than what we were used to.

And we wanted to almost start from a blank canvas and say, if we were redesigning this concept for the future and thinking about future-proofing Sweetgreen for New York and then beyond, what would we do differently?

So, we hired a brand new architect. We hired a digital agency to help us build a mobile app. That was kind of first-of-its-kind. A mobile order and pickup, which was new for Sweetgreen, and so we spent almost a year and a half in 2012 and 2013 building a new concept. And when we launched New York and Boston, and I think the summer of 2013, it felt like a different business, and it felt different than the competition. And it also had a digital component to it, which was really important.

Copy LinkThe new inflection point that changed everything

BERMAN: When companies hit that second founding, that second inflection point, often there are members of the team who’ve helped get from the first stage to the second stage, who are not the right people to get from that point to the next. Is that what happened with you all as well? 

NEMAN: Think that’s one of the hardest things about building a start-up is at each of these inflection points as you’re building scale, you almost have to start over on everything. All of your systems, all of your tools, everything that you do, including a lot of your team may not, you know, what was right to get you from zero to one may not be right from one to two.

Because when you start, you know, you have a small team, and everyone’s a generalist. You need just generalists that do everything. And as you get bigger, you need more specialists. And that generalist may not have the experience of a specialist, but there’s such value in having some people along for the ride the whole way, because there are those culture carriers.

And so we’re really lucky that even today, many people have been with us, you know, 10 plus years. 

Copy LinkHow the co-founders have defined their roles

BERMAN: It’s so fascinating just watching the dynamics among you guys and how seamlessly you move back and forth between who’s answering questions and how you play off of each other. How did you define your roles at the beginning and how has that changed over time to now?

RU: So in the beginning, we did every single job. Cashier, putting lettuce in a bowl, chopping tomatoes, cutting onions, we did it all. 

We always say the answers lie inside the restaurants because it was a really important moment for us to really understand: one, how to operate one of these things, and two understand all the faults, the flaws, and the imperfections that kind of make it better.

But in the beginning, we were all kind of co-founder, co-CEOs of the business. We each did have our own, I would call it, passion or natural sphere of influence. So John was in charge of leading a lot of the financing conversations, a lot of the investor relations, even construction at one time, store development, real estate.

Nick was always in the center of all the food conversations we were having, talking to farmers, thinking about how to build a supply chain a little bit differently. And then my world was always around: how do we tell our story, and how do we have fun in terms of building community? 

That vision that we laid out in the beginning.

We think Sweetgreen, whether it has us or not, can be a hundred-year business. And that’s what we’re trying to do. 

And so we’ve always tried to just leave the ego out of it and do what’s best for the business.

BERMAN: We had John Mackey on Masters of Scale recently, and he was talking about the importance of the real estate choices that Whole Foods made and being very deliberate.

How has your real estate strategy influenced what you’re doing?

NEMAN: What we’ve learned is that every community is different.

So what’s great in one city may not be great in another city. I’ll give you an example, we’re here in Los Angeles.

So in LA, it’s all about accessibility. 

In New York, we very intentionally wanted to tell a story with our real estate. So the best place to probably open in New York would have been Midtown Manhattan.

Today our highest volume locations are in Midtown. Very intentionally did not go to Midtown. Because we wanted to build a lifestyle brand and be part of the community. So we went to the Nomad Hotel. We went to Nolita. We went to Williamsburg. We went to these little communities to build a brand that then gave us license to be everywhere. 

So the closer you can get to your customer and to that local community and remembering that restaurant retail, it’s a local game.

So we talk about scale nationally, but it really is like our business is 230 individual restaurants. And that’s what makes the business.

BERMAN: Did any of that inform the decision to move to LA in 2016? 

JAMMET: As we looked at the trajectory and arc of the business, we were at this point where we had built a good size team. We’d opened a couple restaurants, and we were thinking about this journey to being this national brand we wanted to create. We wanted to win this category, be a national brand. And we looked at California, and we knew it was going to be one of our biggest, if not our biggest market and the importance of winning California. 

And so we decided, you make that move really once, and let’s do it thoughtfully. Okay. And we had about 35-40 people on the team at the time, and they all moved with us. And it was quite a journey. 

BERMAN: Wow.

JAMMET: And we’re really grateful to D.C. Our roots are there. It’s where Sweetgreen is born.

But, you know, we really thought moving the headquarters to California would allow us to really take that next step in being a national brand.

BERMAN: Win, win, win. Yeah. Goes back to values. Yeah. Tell me about the decision to go public.

Copy LinkInside Sweetgreen’s decision to go public

NEMAN: We’re a very capital intensive business.

We own all of our restaurants. That means we’re building each one of these restaurants, as well as, a lot of infrastructure to support what we do, whether it be the supply chain, the technology, the brand, et cetera. 

And I think we got to a point in the business where the markets were in a place, the company was in a place, and we had an opportunity to raise a lot of money, to fuel that next chapter for us. And it’s funny that some people view an IPO as an exit.

We don’t view it as an exit at all. It’s financing; it’s a way to bring capital onto the balance sheet, create a more public platform and more exposure and continue on this mission. So it’s just another day-one type of experience for us.

We thought a lot about it going into it about the fact that this really shouldn’t affect how we make decisions.

Especially the important ones. There does create a public scoreboard. There is some short term accountability, and in many ways that helps you operate better.

But we’re very intentional that having that quarterly earning cycle does not change the investments we make over the long term. And I think we’ve been very fortunate in how we’ve set that company up, the shareholders that we’ve chosen and brought on that are clear with that vision. 

JAMMET: It’s also created a bit of a constructive pressure on keeping us focused as we try to scale and execute, you know, with three founders, there’s a million ideas we want to pursue. And we probably have a history of trying to do too much at once. Being a public company, you have that expectation of having to execute on what you’ve promised to the street.

So it actually creates a bit of this constructive pressure for us to actually try to stay very focused on the business plan at hand.

Copy LinkHow the team infuses tech into their business

BERMAN: One key component to Sweetgreen’s growth is their adoption of technology to make processes like ordering lunch, paying, and pickup efficient and quick. The Sweetgreen app was created well before the pandemic restrictions forced a lot of restaurants to pivot, giving the company a huge head start on the competition. It was born out of a response to one of the good problems a company can have.

So the Sweetgreen app was one of, if not the first, restaurant apps that I had on my phone. You mentioned that as a key part of the growth. I’m curious how you decided to make that investment, how it evolved and particularly what happened for you as COVID hit, the world shut down that you already had that in place.

NEMAN: Yeah, so we opened our first restaurant August 1st, 2007. The iPhone had not been released yet. So the iPhone comes out just a couple months later. It’s just crazy to think how much the world has changed.

BERMAN: I was working at MySpace at the time. That’s how much the world has changed.

NEMAN: The world has changed since that moment. And in many ways, I think we were very lucky because we were 22 years old, digitally native in many ways. And all of a sudden this revolutionary product comes out.

And you know, if you fast-forward, we have a few restaurants that open at the time. Amazon, you know, the world is moving towards e-commerce.

And I remember the saying was. ‘Well, you guys are luckier in food because that’s the one thing Amazon’s never going to do.’

Yeah, it’s funny, it’s funny to think about that today as they own Whole Foods and kind of do it, do a lot more. But at the time it was viewed as why no one’s going to buy food online.

It was almost thought to be crazy. But for us, we had a huge problem in our business, which was like really an opportunity, which was we had these huge lines. Once we got going, we would have huge lines. We were known for these massive lines that would wrap around the block. And at the time, most of our business was very lunch-driven.

So you had a very short window to make all of your money. So it’s just how fast you could go. And so the simple idea was, wait, why can’t you just order on your phone and have a second line?

The funny story about that is, at first, probably like most companies, the online orders would be held behind the counter.

You’d have to walk up to our team member and be like, “Hey, my name is this.” And they’d go behind and grab the order. No one thought you could just leave food out there. We didn’t think you could either. Well, one of our restaurants was really small, didn’t have much space behind and had a lot of online orders.

So they just started stacking the wall, and they just took—

BERMAN: No, no call to headquarters. Just like, “Hey, this is what we got to do to make it work”

NEMAN: No, they just put a Metro shelf out there and just started stacking orders, and customers just started taking them. And we realized, they actually preferred it. Like it was great. It was like this pure frictionless pickup experience.

And so then we’re like, okay, let’s build this into the restaurant. 

BERMAN: As part of their experimental nature, the founders are keen to find new ways of making their business more efficient wherever possible while maintaining the quality and experience their customers have come to expect. This is one of the most important parts of Sweetgreen’s DNA. So when they venture into new tech, they do so with a commitment to their values and to their team members.

NEMAN: We see technology as an enabler in order to improve that customer experience. And we use technology in so many parts of our business, whether it be our online ordering or our delivery channels, our digital, it makes up about 60 percent of our business happens

BERMAN: Wow.

JAMMET: We also use a lot of technology and how we enable our operations, whether it be some of the tools we use in the back of house with some of the forecasting around how we order, how we schedule labor, how we prep our food. And more recently we’ve invested in automation, which we think is another accelerant to improving the customer experience.

So when you think about a Sweetgreen, we do a few things. We do prep in the restaurant, we buy great food, we prep it, we then assemble it, and then we serve it.

Within that process, what we realize is most restaurants, as they get bigger, they begin to outsource the prep. They take the prep and they put it in a commissary. The food ends up showing up in a bag. The chicken becomes precooked. All of those sorts of things in order to manage consistency and create better unit economics.

That’s something we didn’t want to do. We saw the valuable parts about what we do being hospitality. And the prep and the sourcing and the assembly in many ways is actually where there are a lot of the challenges. It can be, you know, you can get orders wrong. You can be off on time and we’re like, this is a perfect opportunity for automation to actually improve the customer experience, improve the team member experience and improve our unit economics.

So like a perfect win, win, win that over time can actually protect our ethos because we’re going to find efficiencies not in sacrificing the quality of the food. But using technology to innovate the experience.

BERMAN: Is AI in the same lane for you? Are you finding efficiencies through AI that improve the customer service?

NEMAN: We have been for a while. There’s a lot we do on the marketing side with CRM. We’re doing a lot today using AI for labor deployment and ordering. We have been playing with a lot around order recommendations, kind of like personalized menus and those sorts of things. So it’s a very exciting time for us to take advantage of some of these, some of these different tools.

But the automation is really the big platform shift that we’ve led. We have two restaurants that are automated today. It’s called the infinite kitchen, the technology. And we acquired a company to help us enable this. And we think that, you know, over the next 20 years, automation is that next platform shift, similar to the digital transformation we’ve seen over the past 15.

BERMAN: Infinite kitchen automates assembly of Sweetgreen’s signature salads and bowls. Kitchen staff still cook and prepare all of Sweetgreen’s ingredients, sauces, and more. And workers still serve guests, guiding them through the menu, and helping them get their order just the way they want it. Orders are placed at a kiosk, and then the technology helps ensure any specifications or modifications are followed to a T.

You can see how this would reduce human error on orders. The automated system delivers your lunch without onions or with those extra cucumbers. Jonathan says the impact on labor is nuanced.

BERMAN: And, the idea of automation, does that replace workers? Does that eliminate workers? Is that part of the vision for how you expand?

NEMAN: So, we’re mostly putting them in new restaurants. We don’t plan on eliminating any workers as part of the rollout. So it’s going mostly in new restaurants and in any retrofits that we have, we will keep those jobs for our team members.

The way we see it is actually elevating the role of our team members. and getting to focus on. What really the core of the restaurant is, which is around service, hospitality, and also coaching and development.

And automation in many ways helps us do that, because now it’s a little bit easier to run. You can run a really high volume location without having to worry about one part of it. And the team members get to focus on the parts that they enjoy. Be it the cooking of the food, and the culinary aspect, or the hospitality, or the coaching.

You know it’s interesting when we announced it, we were a little bit nervous how our team is going to feel. But the response has been like, can I have one first? Like people are, people are lining up and the happiness we’re seeing in the stores that have it are much higher. We’re seeing much less turnover in the, in the restaurants that feature the infinite kitchen.

And so it’s still very early, but we’re very excited about the opportunities.

BERMAN: With Sweetgreen, Nathaniel, Jonathan, and Nicholas are, in so many ways, an embodiment of the American dream.

Children of immigrant entrepreneurs who turned a dorm room idea into a publicly traded company valued at more than 2.5 billion dollars. Their persistence and their willingness to learn from challenges while adhering to their core values around sustainability and healthy food have helped drive their scale strategy and key decisions. 

And at each inflection point of growth, they have found a way to adapt their business model and their team, demonstrating that to evolve, you may have to start over.

As they implement big ideas like an automated kitchen, they’re staying mindful of changing palettes, setting up their business to outlive them, and adding value to the world on so many levels.

I’m Jeff Berman. Thank you for listening.